Morning Update at 0800hrs for Intraday Market Level

[pranayk]

morning update at 8 am 06 aug 09


last night dow recovered from a loss of 112 point to finally close just 39 points down.in fact it had recovered the entire loss but profit booking during closing minutes brought it down by end. More important s&p500 which had slipped below the 1000 mark recovered to close at 1002.brazil closed .6% up. European markets which had closed earlier when dow was trading badly down, closed nearly 1% down but uk ftse sensing dow recovery closed only .5% down. Asian markets have opened flat to mixed with a negative bias and may remain mixed with a period of weakness around the time of indian opening.

For indian markets, as the fear of weak world markets have receded to some extent, expect a flat to mildly weaker opening. Nifty may try to save the critical support at 4669levels initially if asian markets recover & show strength. However during intraday corrections if the short term support line around 4670 is breached, it may bring temporary weakness to nifty for a fall towards 4650 followed by wednesdays lows around 4630 to 4625 levels for another likely bounce up from here. On the higher side critical level around 4717 will continue to pose as a formidable resistance a decisive breach of which may only take nifty towards 4747 levels.

For intraday trading on thursday,option traders may continue to hold their calls as well as puts hoping for a decisive break out of 4717 zone or a decisive fall below 4616 or 4600 levels. They may reduce half the bought calls if nifty moves towards 4747 or 4750 levels (one can only hope that nifty reaches these levels) & add 4500 puts here or short 5000 calls by holding on to lower calls. If nifty moves down towards or below 4650 to slip towards wednesdays lows of 4630 or 4620, they should book profit on puts or hold puts and short 4400 puts and buy back 4800 calls. In this volatile markets, cyclic intraday trading as per up & down movements of of nifty brings good gains by end of the day. Inflation announcement around 12.30 pm may either be completely ignored or may have a 5 second blip.

 

[arbharath]

Thank you Mr Pranay.

 

[sameer999]

thanks alot pranayk for this useful post.

 

[NFpositionaltrader]

thanks for the analysis Mr.Pranay, have a few questions though..

Markets for 06 aug 09
Within this rectangle also, there is a straight smaller rectangle with resistance around critical 4717 and base around 4588 levels.

NIFTY did not breach 4717 convincingly( high 4718.15) & crashed

Well if 4588 does not hold then the bulls will surely return around 4565 levels.

NIFTY bounced back around 4565 ( low 4559.20) , but have the bulls really returned back even though it closed below 4600 ?

 

[pranayk]

Analysis for 7th august 2009

 

[pranayk]

markets for 07 aug 09

again the critical index level of 4717 became a formidable resistance and nifty having remained above 4700 for the most part of the day could just touch the level of 4717 once & traders realizing that nse index can not cross the magic level of 4717, suddenly went rampage on a ruthless shorting spree & bulls too liquidated their positions and joined the party with bears & started shorting when the critical intraday support at 4560 was decisively breached. The merciless shorting was so powerful that nifty kept on falling & falling till it reached the lower band of the rectangle around 4560 levels. Although the savage fall during last hour of thursday has sprained the back bone of nifty, only a decisive breach of 4555 will certainly break the backbone of nifty to reach 4475 levels in quick time. However a bounce back from thursday lows can be considered as a normal fall induced by the met department as similar was the case on 29th july induced by reliance results or like the fall on 22 july induced by commodity price melt down.

If one has a look at the hourly chart above, one will notice that nifty after breaching the neck line of the mini h&s formation,took support exactly at the base of the rectangle. The ferocity of downward move clearly suggests that the base of the rectangle around 4555 will be breached & nifty may come down further to find temporary support around 100 ema around 4515 levels, & a breach of 4515 can easily bring down nifty to support around make or break 4477 levels. All these gloomy situation will only occur in case of a weak us & asian markets. However with strong asian markets in the morning ( which seems to be most unlikely), nifty can show a sharp bounce back towards 4628 to 4646 levels to encounter another bout of shorting, but whether the shorting this time will be successful or not is to be seen.

The fall on thursday has weakened most of the daily indicators all of which were earlier enjoying the luxury of upper 80% comfort zone & now have slipped below it. Another day of fall can confirm the weakness that the daily indicators have started to generate on thursday. Last weeks close for nifty was at 4636 and last weeks high was at 4670 after 3 consecutive weekly rise. So, niftys closing below the highs of last week may be nothing uncommon although bears will make their utmost efforts to pull down nifty on every intraday rise on friday to close below last weeks closing levels of 4636 to thwart 4th consecutive weekly gain.

 

[pranayk]

thanks for the analysis Mr.Pranay, have a few questions though..


NIFTY did not breach 4717 convincingly( high 4718.15) & crashed


NIFTY bounced back around 4565 ( low 4559.20) , but have the bulls really returned back even though it closed below 4600 ?

Closing below 4600 has weakened most of the daily indicators. A lot will depend on the asian market in the morning (which will likely to remain weak seeing the present us markets). So one cannot formidably say that the bull has returned back, offcourse nifty will find support at various levels and will try to bounce back. Detailed explanation with chart is given above.

Thanks

 

[drshajikt]

thank you pranayk for this useful post

drshajikt

 

[findvikas]

Closing below 4600 has weakened most of the daily indicators. A lot will depend on the asian market in the morning (which will likely to remain weak seeing the present us markets). So one cannot formidably say that the bull has returned back, offcourse nifty will find support at various levels and will try to bounce back. Detailed explanation with chart is given above.

Thanks

Thanks Pranay. Everyone in states is waiting for Job Reports which will happen after India market close tomorrow, I personally do not see the breach of 4730 this week atleast. US jobless claims in private sectors are expected to grow in numbers which could drag US markets and you might see a gap down on Monday morning in India & other Asian markets. Monday is far, lets wait for tomorrow

 

[pranayk]

morning update at 8 am 07 aug 09

last night dow recovered from a bigger fall to close nearly flat with only 24 points down, however important index s&p500 breached the 1000 mark to close at 997. Brazil was down by more than 1%.european markets closed in the +ve with uk ftse closing up by .9%.most of the asian markets which did not correct yesterday are likely to correct today at the back of fall in indian and chinese markets yesterday. Hong kong, singapore, taiwan & japan indices are to be the hardest hit.

For indian markets, since the more than 2% fall on thursday was worse than most of the other equity markets of the world, there is likely hood of some sort of corrective upward bounce after retest of thursdays lows. There might be a tug of war between the bulls & bears to close nifty above or below last weeks closing levels of 4636 but most likely the markets will close below the last weeks close to pause a bit in the weekly charts after 3 consecutive weeks of rise. Traders are advised to trade in limited quantity confining to intraday trades only without carry over of large un hedged future positions for next week . Option traders may continue with the plan of holding both calls and put options along with shorted higher calls as well as shorted lower puts.

For intraday trading on friday, only a decisive cross over of pivot around 4620 followed by 4656 can infuse some hope for the bulls or else markets are likely to be range bound with a negative bias. Approaching & crossing of last weeks highs of 4670 is likely to invite ruthless shorting again.